White House Threatens To Kill ‘Clarity Act’ After Coinbase Pulls Support
Administration officials brand Coinbase’s withdrawal a “rug pull” as COIN slides on fears of a legislative collapse.
The Deal Is Dead. For Now.
The White House is prepared to torch the Digital Asset Market Clarity Act if Coinbase does not return to the negotiating table, signaling a total breakdown in Washington’s most critical crypto policy effort to date. Administration officials have privately branded Coinbase’s last-minute withdrawal as a “rug pull” against the industry, leaving the legislation in limbo just hours before a scheduled Senate vote.
Markets reacted immediately. Coinbase (COIN) slid 2% in post-market trading Wednesday as the news broke, struggling to find support near $285 as traders priced in the prolonged regulatory gridlock. The sell-off reflects a sudden repricing of political risk: the industry’s most powerful lobbyist is now openly at war with the President’s legislative agenda.
The Sticking Point: Yield Wars
The conflict isn’t about “clarity” anymore. It’s about revenue. Coinbase CEO Brian Armstrong walked away from the bill after reviewing a late draft that would effectively ban stablecoin issuers from paying yield to customers. Armstrong’s team argues this provision is a “giveaway” to commercial banks, designed to protect them from competing with 4-5% on-chain yields.
“You can’t really have banks come in and try to kill their competition at the expense of the American consumer,” Armstrong stated, defending the move.
The draft legislation, spearheaded by Senate Banking Committee Chairman Tim Scott, was intended to build on 2025’s GENIUS Act. Instead, it has exposed a fracture between crypto-native firms and the traditional banking lobby. Sources close to the negotiation confirmed that the White House views the stablecoin yield ban as non-negotiable for banking partners, creating a stalemate that no amount of lobbying spend seems poised to fix quickly.
Institutional Context
This isn’t just policy theater. The “rug pull” narrative circulating in the West Wing suggests the administration feels blindsided. By postponing the markup indefinitely, the Senate has effectively frozen the only vehicle capable of clarifying market structure before the midterms.
For market makers, the implications are binary. If the Clarity Act dies, the SEC retains its aggressive enforcement mandate by default. If it passes without Coinbase’s blessing, the industry gets a framework that cripples its most profitable utility, yield. Volatility is the only guarantee.
